Obama's budget proposal

Many liberals and progressives are outraged that President Obama is proposing cuts in Social Security and Medicare.   I'm not so sure these proposals are a bad idea, but others think that these programs should be sacrosanct.  (Just as much as Republicans want tax hikes to be completely off the table.)

The Social Security cuts are in the form of changing how the cost of living increase is figured.   As of now, it is based on the actual increase in cost of living if people continue to live without making any changes in what they buy.  The proposal, called the "chained CPI" works like this:   if the cost of beef goes up, instead of automatically assuming that people will continue to buy beef at the higher prices, the chained CPI figures what people actually do:   often they will substitute a cheaper food, like chicken or pork.   Or they might be a cheaper car.   Or shop for clothes at Target instead of Macy's.

Is that so bad?   Personally, I would prefer they found savings by slowly increasing the age of eligibility by a year or two and by increaseing the income level that is taxed for social security benefits.

The cuts to Medicare do not reduce benefits to patients.   In part they come from making it more possible to substitute generic drugs, which can save huge amounts of money.  Of course, the pharmaceutical companies oppose this.  Other changes have to do with how much reimbursement providers get and cutting fraud.

So -- it's debatable, I think, as to how bad these things are.

The real point, though, is that this is at least in part a negotiating ploy with the Republicans.  It calls their bluff -- because Obama is adamant that these cuts will not be included unless they are part of an overall package that raises revenues as well.   If they turn away from this, in order to cling to their "no new tax" pledge, this will further paint them as intransigent.

Ralph